The Malaysian ringgit has continued to strengthen and is now approaching its highest level in nearly four years, driven by improving economic momentum and easing global trade tensions.
Several analysts expect the ringgit to potentially break below 4.1 against the US dollar, its strongest level since May 2021, supported by stable interest rates and an economy showing positive acceleration. This performance has made the ringgit the best-performing currency in Asia.
Foreign Inflows Fuel the Ringgit’s Rally
Bloomberg data shows that foreign investors have purchased nearly US$4 billion worth of Malaysian bonds throughout 2025, providing significant support for currency stability.
Malaysia’s export-driven economy is also beginning to benefit from a recovery in global demand, with third-quarter growth exceeding projections. Investor sentiment has improved further as trade tensions between the US and China—Malaysia’s two largest export markets—continue to ease.
Maybank noted that “ringgit sentiment continues to remain positive,” supported by accumulating momentum and sizeable corporate foreign-exchange reserves that are expected to be gradually converted into ringgit.
Even so, technical indicators suggest the possibility of short-term weakness. Bloomberg’s consensus survey forecasts the ringgit to soften toward 4.18 per US dollar by year-end, before resuming a strengthening trend in 2026.
Central Bank Policy and Valuation Outlook
Bank Negara Malaysia (BNM) kept interest rates unchanged in November, signaling confidence in the resilience of the domestic economy despite ongoing external pressures, including US import tariffs. The ringgit has gained more than 8 percent so far in 2025.
BNY senior strategist Wee Khoon Chong assessed the ringgit’s valuation as “attractive even after the rally in 2025, considering how weak or heavily sold the ringgit was from 2021 to 2023.” This leaves room for further appreciation ahead.
Prime Minister: Strength Supported by Fiscal Discipline
In the Dewan Rakyat, Prime Minister Datuk Seri Anwar Ibrahim emphasized that fiscal discipline and systematic economic management are the key foundations of the ringgit’s strengthening. He noted that the currency’s appreciation reflects growing market confidence in the government’s economic policies.
Anwar highlighted the effectiveness of subsidy rationalization measures targeted at low-income groups, including adjustments to RON95 prices. “If we look at domestic factors, the strength of the ringgit is clearly due to the policies we have implemented from the start,” he said.
He added that the public has generally responded positively to these policies, including during his recent visit to Sabah.
Challenges: Stronger Ringgit Has Yet to Lower Import Prices
Despite the ringgit’s appreciation, Anwar acknowledged that import prices have not declined significantly, particularly in sectors such as animal feed and pharmaceuticals used in private hospitals. “Our inflation is very low, yet we have not seen a significant reduction in prices despite the ringgit's strength. This is not fair,” he said.
The government is now tightening oversight to ensure that importers adjust prices in line with lower import costs. In addition, the Jualan Rahmah program continues to expand to ensure that households benefit from price stability.
Impact of Economic Policies
Anwar explained that various national strategies are strengthening the ringgit while also boosting the performance of the services sector.
The services sector surplus of RM0.7 billion in the third quarter of 2025—the first in 14 years—is the result of the MADANI Economy framework, digital transformation through the New Industrial Master Plan (NIMP), the energy transition agenda, and the National Semiconductor Strategy (NSS).
The rapid growth of data center development has contributed significantly. Although the construction phase requires substantial imports, data centers eventually generate high-value service exports once operational, improving the services account balance over the long term.
